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I am beginning to think that you don't think Apple has a moat :-}

"If you think they are, then it is a moat, I don't."

https://boards.fool.com/you-are-just-deliberately-missing-th...
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If you thought Nokia was cheap, very cheap... based on EPS or other....



Nokia did not have a moat anything like Apples. But the persistence of such comparisons is great, otherwise Apple would never get this cheap.
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Nokia did not have a moat anything like Apples.

At peak Nokia had 50% market share, compared to iPhone's 15%. BTW, what is exactly Apple's moat?
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BTW, what is exactly Apple's moat

It is very hard to switch from using an Apple phone or a device to some other phone or device. Possible - yes.
Likely - no. That is moat. Other words to explain are - user interface, familiarity, the learning curve, the supporting eco system etc.
Most non techie folks are unlikely to switch away from Apple.

If one of the other companies (Samsung, Motorola, Huawei, Amazon or Google) come out with a revolutionary phone (similar to when iPhone came out to replace Nokia),
then the moat disappears overnight. Probability is very very low that will occur but greater than 0.
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Likely - no. That is moat

I switched from iPhone. So I am not able to understand. But the way I would like to define a moat is the customer has to be seriously inconvenienced by the switch. It has to be real tangible barrier, not made up ones like "learning curve".

I understand the eco-system argument, etc. But, are they truly "moat".

PS: I am not arguing Apple will vanish from the face of the earth like Nokia but what are the compelling reasons a customer has to upgrade every 3 years? Why not 5 years? What are so sticky that the customers will not switch based on price or over time the margins on the device come down drastically?
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I switched from iPhone. So I am not able to understand.

I use Samsung phone (not iPhone). My phone is broken but I am finding very hard to switch.

My family has three other members and they all use iPhone. They said that they will never switch. They love their iPhone and use features like iTunes, Facetime, iCloud etc.

But the way I would like to define a moat is the customer has to be seriously inconvenienced by the switch. It has to be real tangible barrier, not made up ones like "learning curve".

One can switch from Coke->Pepsi and Colgate->Crest. No serious inconvenience. Yet, consumers stay with what they are used to.
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I refuse to buy an iPhone because of the whole Apple ecosystem. I don't want to be captive to the ecosystem. Everyone in my family uses iPhones. They are transnational and over 50. I cannot participate in their iChats, FaceTime, etc. My obstinacy will lead to familial isolation. Apple has a HUGE moat. I hate them for it, which is why the only Apple prodoi own is their shares.

PP
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I cannot participate in their iChats, FaceTime, etc. My obstinacy will lead to familial isolation. Apple has a HUGE moat.

Again, made up moat. You have WhatzApp, text etc... even facetime for android is available. I think the "moat" is hardly understood by folks.
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That is a iphony moat. I use WhatsApp on my android phone to text, call & video-call a half-dozen iphone users ALL THE TIME.

ps: don't knock a little familial isolation. Peace & Serenity.

pps: the "learning curve" works both ways. Every time I use an apple product & it instantly becomes clear that they do things differently "JUST BECAUSE", I mutter "F Em" & stop using it. I have owned the stock 4 or 5x but will not buy the products. That is a moat that keeps me & a lot of other people out.
Sure, I could "learn" to do things the "apple way", but "F Em".
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Yeah, right. Go ahead and try to get your social network of iPhone users to set up WhatsApp so your Apple boycotting ass can participate in their group fun. Right, good luck with that. The seamless simplicity of the entire Apple ecosystem is quite a powerful lure.

No one is saying that there aren't other roads to Paris, it's just that Apple has built a very convenient super highway. Highways have tolls but people choose them over secondary roads for a reason. And I'm saying this as someone who has obstinately avoided Apple.

PP
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You don't read at all well. I'll try again:

I use WhatsApp on my android phone to text, call & video-call a half-dozen iphone users ALL THE TIME. They ALL had WhatsApp installed before I ever asked them about it. EVERY ONE OF THEM uses WhatsApp frequently.

Let's see how you can confuse yourself about that reality. I'm saying this as someone who thinks you're rather obtuse.

ps: LOL with your "group fun". Are you a junior-high girl craving digital PJ parties?

pps: people who are so technologically or emotionally-impaired that they'd be unable or unwilling to pollute their iPhone with WhatsApp are UNWANTED in my digital life. If I see them 4x/yr in person, that is plenty.
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Yeah, right. Go ahead and try to get your social network of iPhone users to set up WhatsApp

OK. Let us just look at the facts... iPhone is 15% of smartphones and 85% of android. So, 15% of the iPhone users are not going to talk to 85% of other phone users and only going to communicate with folks with iPhone only?

This reminds me of folks arguing all the big banks use IBM's Mainframe... Again, I am not dismissing Apple's service revenue, but...
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No one is saying that there aren't other roads to Paris, it's just that Apple has built a very convenient super highway. Highways have tolls but people choose them over secondary roads for a reason.


Very well said. Spot on.

The thing that is abundantly clear is that there is a small but important segment of the global population who loves what Apple offers, and is willing to pay up for it. That's why Apple is the most profitable business in the world, and I imagine the most profitable ever absent Standard Oil...but I don't have that data.
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PS: I am not arguing Apple will vanish from the face of the earth like Nokia but what are the compelling reasons a customer has to upgrade every 3 years? Why not 5 years? What are so sticky that the customers will not switch based on price or over time the margins on the device come down drastically?


Do you even know the point you're trying to make? Stickiness and a moat have absolutely nothing to do with frequency of repurchase. They're completely different issues.

Moreover, people said the same thing about the "over-priced" Macs vs Wintel too. Yet year after year after year, in the non-enterprise world, Mac persistently gained share while maintaining its high price, while Wintel generally became cheaper and cheaper crap. If anything, the personal nature of pocket computers--I mean smartphones--makes this dynamic more likely to apply with iPhone. And even more likely than that to apply to Apple Watch, and smart glasses. The more important and more personal a category becomes, the more it plays to Apple's strengths.
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Moreover, people said the same thing about the "over-priced" Macs vs Wintel too. Yet year after year after year, in the non-enterprise world, Mac persistently gained share while maintaining its high price, while Wintel generally became cheaper and cheaper crap. If anything, the personal nature of pocket computers--I mean smartphones--makes this dynamic more likely to apply with iPhone.


So Mac, despite dramatically higher prices than similar "spec" Wintel computers, persistently (though very gradually) stole share for roughly the last decade...and this despite the fact that Windows still had an advantage of more developer mindshare and dedication. True, this was mitigated tremendously by the fact that for most users, most of their time is on a web browser, making traditional applications far less important. Yet that should make this dynamic just that much more in favor of iPhone, in which Apple has a definite (which is different than dramatic) advantage over Android.
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Stickiness and a moat have absolutely nothing to do with frequency of repurchase. They're completely different issues.

Do you? Stickiness is about pricing power, frequency of repurchase is about pricing power.

Mac persistently gained share while maintaining its high price, while Wintel generally became cheaper and cheaper crap.

Just simple facts... Mac has 7% market share. So in 35 years of existance they gained 7% market share and you trash wintel as "crap"?

Get real, we can have a conversation.
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To give credit where it's due, I remember listening to this hedge fund manager on CNBC about 2 months ago making a case for shorting Apple when it was still trading well above $200. I thought he made a compelling case. I managed to find the Youtube link. There are some other videos as well where he has been saying something similar for the past few months.

https://www.youtube.com/watch?v=hfR_861y420

Anecdotal evidence about IOS vs Android is all well and good. Both sides have valid points, and of course neither OS is going to disappear any time soon. But at the end of the day, it really is a question of valuation in the context of the big picture and long term trends.
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Do you? Stickiness is about pricing power, frequency of repurchase is about pricing power.



Again, the Mac vs PC market is instructional here. Mac clearly has stickiness and pricing power, much more so than Wintel. Yet the frequency of repurchase is much longer on average for Macs. That's one of the big reasons people love them. (Same with iPhone vs Android. Don't take my word on it...look up used phone pricing)
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Phillips, the way you talk, sounds somewhat like Charlie Munger!
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Not sure this counts as a moat, and it’s only an an example of 1 user, but here’s my story.

I’m a PC guy. When it comes to computers, I know my way around them whether it’s at work or home. All my personal information is on a PC. Put me in front of an Apple computer and I’m lost. Literally (much to the amusement of my Apple loving family). I’m encouraging Ms. Wolf to move to Apple, but only so our kids become tech support, not me. Lol.

But I also own an iPhone, iPad, and Apple Watch. I love them and I interface with them a lot on a daily basis. I tried an Android years ago and hated the experience. Although I’m sure they’ve improved, I won’t switch because it means switching 3 items.

AW
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You don't read at all well. I'll try again:

I use WhatsApp on my android phone to text, call & video-call a half-dozen iphone users ALL THE TIME. They ALL had WhatsApp installed before I ever asked them about it. EVERY ONE OF THEM uses WhatsApp frequently.


We understand each other perfectly well despite my illiteracy. You simply don't see the Apple ecosystem as a moat. I said it's hard to convince your Apple embedded social network to switch to new applications and you said no it's not. This is the difference in our investment theses. For you, the price drop is deserved, for me it's an opportunity. Only time will tell.

PP
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+ Apple products quality is the best. This matters the most.

+ Apple is generating massive revenue/profits on a very small skew of products that leverage each other. Everything they touch is gold. This small skew is a huge advantage to manage.

+ Once you own an Apple (iPhone, iPad, Mac etc.) you are locked in perpetuity (by choice)

- Mobile phone market is saturating, which is a big problem

- Apple has not been able to effectively penetrate the homes with their "Alexa" or "Google home hub" equivalent. I would pay top $ for their "facebook portal" equivalent and give it to my parents.

- Apples perceived closed loop system is a problem and Siri is not effective

* iWatch as a product is not a must have (failure ?). It has a $T potential if Apple turns it into a "health sensor platform" for developers to write apps.
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Once you own an Apple (iPhone, iPad, Mac etc.) you are locked in perpetuity (by choice)

This is where I am not convinced that Apple has a lock. Only time will tell...
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"Once you own an Apple (iPhone, iPad, Mac etc.) you are locked in perpetuity (by choice) "

"This is where I am not convinced that Apple has a lock. Only time will tell..."
----------

Obviously there is no absolute lock against switching. But it becomes stickier which is what Warren talks about. For instance, all of my passwords from my laptop (MacBook pro) are instantly available through FaceID on my iPhone XS max. If I buy a chromebook, none of my passwords will be synced. If I buy an android, none of my passwords will be synced.

Many people have an "investment" in apps on their mobile device - the non-free apps they have accumulated over the years. Those have to be repurchased if they switch ecosystems as far as I know.

Also it just feels different. The interface is different, despite android being a blatant copy of Apple's model for the touch screen smartphone. Historically is also looked less refined - square icons, antiquated overlays that sit on top of Android, bloat-ware preinstalled by Samsung and the like.. But that is being addressed well with this move towards "pure android." They should have pushed for "pure android" a lot sooner. It will work out well for them.
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Many people have an "investment" in apps on their mobile device - the non-free apps they have accumulated over the years. Those have to be repurchased if they switch ecosystems as far as I know.



Yes. And one doesn't necessarily have to have a fortune to make those app investments lead to stickiness; they desire to not have to repay for those (assuming you still use them) just has to be a fraction greater than your desire to move to Android. Of course, then there are outliers like me who have many hundreds of dollars invested in iBooks and iTunes movies; I sure hope I am forever happy with Apple, because that would be quite painful to eat the cost on those. And though many may dismiss them, everyone I know who has owned AirPods (including various Apple bloggers and tech analysts) absolutely raves about them, and those will not work the same with Android. Ditto Apple Watch. On the other hand, I imagine the percentage of those who have iPhone and also have these other items is somewhat small...for now.
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No Philip. You don't understand ANYTHING I said.
1) I DO see the Apple ecosystem as a moat. I said that clearly. I said it is a moat that keeps more people out (using UNITS that AAPL hates) than it keeps in.
2) I don't have a "Apple embedded social network". I feel like my IQ falls 10 pts every time I even hear the words "social network".
3) I clearly told you that pretty much all (maybe ALL?) the iphone users that I associate with are ready, willing, able & ALREADY DO use x-platform apps like WhatsApp. Clearly. I can surmise what is wrong with your (ahem, here goes 10 pts) "social network".
4) "A" price drop was deserved. How much? Mr Mkt knew they would have a lousy Dec qtr. It isn't hard to predict the Chinese will use AAPL as a bargaining chip against Trump. They did & will continue to do so. I bought 1,000 sh of AAPL yesterday. The pre-announcement was the opportunity. Growth in China left the stock price.

Our only agreement: Only time will tell.
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btw, does anyone do these #s?
My quick calc says AAPL's revs in "Greater China" fell 26% Y/Y in Dec qtr.
My quick calc says AAPL's wwide iphone revs fell 15% Y/Y in Dec qtr.
My quick calc says AAPL's wwide iphone UNITS (GASP!) fell < 20% Y/Y in Dec qtr, which would be much better than the gloomy forecasts.

I don't track AAPL's qtrly #s, so I'm not sure the iPhone #s make sense. How could consensus revs have been so high when many analysts had already predicted much lower iPhone units than actually occurred?
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This presentation shared on another forum (authored in 2017) does a great job of summing up Apple iPhone's lack of 'stickiness' in greater China -

https://chinachannel.co/apple-china-report-2017/
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Again, made up moat. You have WhatzApp, text etc... even facetime for android is available. I think the "moat" is hardly understood by folks.

You are just deliberately missing the point. If you don't believe it you don't believe it.
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You are just deliberately missing the point. If you don't believe it you don't believe it.

What is a moat? Something that allows you to separate yourself from the customer, make them sticky. The question is, are these products either individually or collectively enable Apple to hold a customer from switching? If you think they are, then it is a moat, I don't.
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What is a moat? Something that allows you to separate yourself from the customer, make them sticky.

Apple has customers who own and use their whole product line - a MacBook, an iPhone, an iPad, AirPods, an Apple Watch, an Apple TV, and various services like iTunes and iCloud. I am one, as are many of my friends and colleagues.

It's not that it's "hard" for me to use an Android phone, or PC laptop, or a Roku streaming device, or other brands of headphones/watches/etc. It's easy to switch. I do have PCs in the house, and other brands of devices. But they are less convenient, since the Apple products typically are designed to interact seamlessly. Just one example: after a few weeks of using the Apple TV (which had no real instructions other than "plug it in"), I noticed a screen sharing widget in my iPhone control panel. Oh, I thought, I guess I can mirror iPhone video onto the Apple TV! Yep - a few taps on the screen and I was mirroring a video from the camera roll to the TV.

So I agree with your definition of moat, and from where I sit, Apple has such a moat, one that it continues to deepen with each new product.

Rob
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Apple has such a moat, one that it continues to deepen with each new product

Lots of wonderful individual anecdotes... are they good enough to sustain $150 B iPhone sales?
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Lots of wonderful individual anecdotes... are they good enough to sustain $150 B iPhone sales?


Round and round we go. I am beginning to think that you don't think Apple has a moat :-}
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I am beginning to think that you don't think Apple has a moat :-}

"If you think they are, then it is a moat, I don't."

https://boards.fool.com/you-are-just-deliberately-missing-th...
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